While several questions are being raised over the credibility of Facebook ads and future of massive ads on social media, a report on study of brands on Facebook reveals that the social media giant plays an important role in recommendation and purchases of several popular brands.
The report titled ‘The Facebook Factor’ by Forrester, analysed the impact Facebook for four brands — Coca-Cola, Walmart, Best Buy and BlackBerry (Research in Motion). Key findings of the report suggest that BlackBerry Facebook fans are 4X more likely to recommend the brand to friends and family. Similarly, Coca Cola Facebook fans are almost 50 per cent more likely to consider a brand purchase and Best Buy Facebook fans are almost 2X as likely to have purchased from the brand in the last 12 months.
Using a statistical technique called logistical regression, the study examined a large number of factors that potentially contribute to whether a consumer will purchase, consider, or recommend a brand. The findings of the report reveal that for all four brands, being a Facebook fan of the brand boosts purchase, consideration, and recommendation.
For example, 79 per cent of Best Buy Facebook fans bought there in the last 12 months vs. 41 per cent of non-fans. And 74 per cent of them recommend Best Buy vs. 38 per cent of non-fans. Similarly, the findings suggest that being a Facebook fan had more influence over these behaviours than any other factor. Being a Facebook fan of Best Buy increases the odds that a customer will purchase by 5.3 times; the next closest influence factor is having researched consumer electronics, which only increases the odds of purchase by 1.4 times. The pattern is repeated for every single behavior and every single brand. For example, having a Walmart nearby doubles the odds that you'll consider buying there, but being a Facebook fan of Walmart increases those odds by more than a factor of four.
For all four brands — Best Buy, Coca-Cola, BlackBerry, and Walmart — a Facebook fan has a significantly higher probability of making all of these brand interactions. Smartphone owners who are Facebook fans of BlackBerry, for example, are 5.6 times more likely to have made a purchase from BlackBerry in the past 12 months than non-fans, with everything else held equal. And Facebook fans of Best Buy are about twice as likely to purchase from and recommend Best Buy. In the case of Coca-Cola, even though 71 per cent of online Americans purchase the product, Facebook fans have a probability of 95 per cent of doing so.
The study was conducted in the US market. Contrary to this report, a recent report by Greenlight claimed that 44 per cent users have never clicked on a sponsored ad of Facebook. Only three per cent respondents said that they regularly clicked on ads and only 10 per cent said they click the ads often. The survey went on to pose a question whether advertisers should be bothered about advertisements on Facebook.
General Motors, the largest automobile manufacturer of US, had recently announced that it will stop advertising on Facebook because it is not getting the necessary consumer attention and Return on Investment (RoI).
For the record, Facebook has over 900 million users globally. As per a recent report of ComScore, Facebook is the leader in the display advertising business in the US with a share of 27.9 percent in 2011. The social media network surpassed Yahoo! in early 2012.